This disclosure relates generally to online systems, and in particular to pricing advertisements presented by an online system.
An online system allows its users to connect to and communicate with other online system users. Users may create profiles on an online system that are tied to their identities and include information about the users, such as interests and demographic information. The users may be individuals or entities such as corporations or charities. Because of the increasing popularity of online systems and the increasing amount of user-specific information maintained by online systems, such as social networking systems, an online system provides an ideal forum for advertisers to increase awareness about products or services by presenting advertisements to online system users.
Presenting advertisements to users of an online system allows an advertiser to gain public attention for products or services and to persuade online system users to take an action regarding the advertiser's products, services, opinions, or causes. Many online systems generate revenue by displaying advertisements to their users. Frequently, online systems charge advertisers for each presentation of an advertisement to an online system user (i.e., each “impression” of the advertisement) or for interaction with an advertisement by an online system user.
Advertisers may specify a budget for an advertisement or advertising campaign to an online system representing a total amount of money the advertiser has allocated to spend for presenting one or more advertisements via the online system. For example, an advertiser specifies a “daily budget” for an advertisement or an advertising campaign identifying an amount the advertiser has allocated for spending each day to present the advertisement or to present advertisements from the advertising campaign via the online system. When selecting advertisements to presentation to online system users, the online system modifies a bid amount of an advertisement associated with a daily budget on behalf of the advertiser until the advertiser notifies the online system to cease presentation of the advertisement.
Alternatively, an advertiser communicates a “lifetime budget” to the online system representing an amount of money the advertiser has allocated to spend on an advertising campaign over a specific time interval. When a lifetime budget is specified, the online system adjusts a bid amount associated with one or more advertisements in the advertising campaign on behalf of the advertiser based on the lifetime budget when selecting advertisements for presentation to online system users until the specified time period lapses. Hence, when an advertiser specifies a budget for an advertisement or an advertising campaign, the online system modifies a bid amount associated with the advertisement or with advertisements in the advertising campaign so the specified budget is completely used but the amount provided to the online system by the advertiser is limited to the specified budget.
However, when providing one or more advertisements to the online system, an advertiser may specify a budget resulting in reduced revenue to the online system. Alternatively, providing a budget for advertisement presentation via the online system advertisers may deter an advertiser from providing advertisements to the online system. Additionally, new advertisers may be discouraged from additional advertisement via the online system if an advertising campaign does not result in a desired number of impressions or conversion events. Hence, advertisers specifying budgets for advertising via an online system without contextual information may specify budgets that reduce revenue to the online system or may be discouraged from advertising via the online system.